South Koreans account for roughly a third of global cryptocurrency trading, according to new research by Cindicator, a blockchain intelligence firm. The nation's residents hold about 30% of all digita
South Koreans account for roughly a third of global cryptocurrency trading, according to new research by Cindicator, a blockchain intelligence firm. The nation's residents hold about 30% of all digital asset trades. At home, roughly 30% of South Koreans own cryptocurrencies, with ownership hitting around 50% among salaried professionals.
Steve Lim witnessed this demand directly. As chief strategy officer at the Korean exchange Coinone, he saw the market surge. "People were crazed over it," he told Forbes in an interview. Lim recalled seniors arriving at Coinone's office wanting to invest 500 million won, about $447,000. They'd heard from friends who invested a couple thousand and "made a killing," and wanted the same returns. Most had no idea how to use the trading app or email.
Cindicator released its Korean Market Analysis on Thursday. The report identifies several drivers: the country's embrace of new technology, massive trading volumes, and government willingness to shape policy around crypto.
Simon Keusen heads analytics at Cindicator. He said South Korea would become central to global blockchain adoption. "The country is very open to new technology. The enthusiasm for crypto assets is palpable. Latest legislative initiatives show that the government understands the potential of blockchain technology. We believe South Korea will play an important role in driving the adoption of cryptocurrencies globally," Keusen said.
Bitcoin never generated the same excitement in South Korea that it sparked elsewhere. Ethereum ignited something different. "After missing the first train, they made sure that this wouldn't happen a second time: Ethereum was coming and they were more than ready," according to Cindicator's analysis.
That appetite built substantial exchange infrastructure. Bithumb and Upbit dominate the market. Over the past 30 days, Bithumb moved $60 billion in assets, ranking it atop global exchanges by USD volume. In South Korea, Upbit controls 53% of the market. Bithumb holds 33%. Coinone and Korbit, smaller competitors, have 8% and 6% respectively.
The exchanges catalyzed broader blockchain development. Coinone built Cross, a platform for cross-border money transfers using blockchain. Bithumb partnered with Qoo10, an Asian e-commerce company, to enable cryptocurrency payments. Bithumb also worked with SeriesOne, a U.S. fintech firm, to launch a security token exchange.
Beyond the major platforms, startups advanced the technology. Deblock runs an accelerator investing in blockchain companies. Mavlux created iChart, a medical records system on blockchain allowing hospitals to securely share patient data. ICON built a blockchain for smart contracts and applications. Banks, insurance companies, universities, and hospitals have already adopted ICON's blockchain.
One quirk emerged: South Korean bitcoin prices diverged from global ones. The Kimchi Spread, also called the Kimchi Premium, measured the gap between won-denominated bitcoin in Seoul and dollar-denominated bitcoin elsewhere. Data from the prior year showed the average spread at 5.5%, with a median of 2.6%. On January 8, 2018, when the total crypto market hit $800 billion, the premium reached nearly 50%.
"Very strong internal demand fuelled by hype, Koreans' continuous search for short-term profits and its country's specific economic characteristics," drove the gap, Cindicator reported.
The government took action. Officials announced a 1 trillion won, roughly $880 million, budget for blockchain development. They also signaled plans to relegal initial coin offerings, which authorities had previously restricted.
